Question : 31. Pennington Products has two product lines: R-100 and R-200. Revenue : 1295681

 

 

31. Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows: 

 

    R-100  

    R-200  

Selling price per unit

$45

$60

Variable costs per unit

15

24

 

 

 

Traceable fixed expenses

$250,000

$360,000

 

 

 

 

 

Pennington has common fixed expenses of $250,000 per year. Last year, the company produced and sold 30,000 units of R-100 and 20,000 units of R-200. Refer to the Pennington Products information above. What is the company’s overall net income? A. $1,260,000B. $   510,000C. $1,010,000D. $   760,000

 

32. Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended: 

 

Miniature Golf

    Arcade   

Laser Tag

Revenues

$225,000

$500,000

$300,000

Variable expenses

50,000

100,000

75,000

Traceable fixed expenses

30,000

40,000

35,000

 

 

 

 

 

 

 

Common fixed costs of $60,000 are divided equally among the divisions. Refer to the Fun-Town Amusement Center information above. The segment margin for the miniature golf division is: A. $175,000B. $145,000C. $125,000D. $  85,000

 

33. Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended: 

 

Miniature Golf

    Arcade   

Laser Tag

Revenues

$225,000

$500,000

$300,000

Variable expenses

50,000

100,000

75,000

Traceable fixed expenses

30,000

40,000

35,000

 

 

 

 

 

 

 

Common fixed costs of $60,000 are divided equally among the divisions. Refer to the Fun-Town Amusement Center information above. The segment margin for the arcade division is: A. $300,000B. $400,000C. $360,000D. $340,000

 

34. Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended: 

 

Miniature Golf

    Arcade   

Laser Tag

Revenues

$225,000

$500,000

$300,000

Variable expenses

50,000

100,000

75,000

Traceable fixed expenses

30,000

40,000

35,000

 

 

 

 

 

 

 

Common fixed costs of $60,000 are divided equally among the divisions. Refer to the Fun-Town Amusement Center information above. The segment margin ratio for the laser tag division is: A. 63.33%B. 56.67%C. 75.00%D. 84.44%

 

35. WSR Inc. sell a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products are as follows: 

 

     Sodas   

    Chips   

Sales

$800,000

$900,000

Variable expenses

200,000

315,000

Contribution margin

600,000

585,000

Traceable fixed expense

120,000

160,000

Segment margin

$480,000

$425,000

 

 

 

 

 

WSR’s management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soda division by $200,000 or increase sales of the chips division by $275,000.What will be the overall net effect on the company’s total profits if the advertising focuses on sodas? A. Increase of $170,000B. Increase of $150,000C. Increase of $120,000D. Increase of $200,000

 

36. WSR Inc. sell a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products are as follows: 

 

     Sodas   

    Chips   

Sales

$800,000

$900,000

Variable expenses

200,000

315,000

Contribution margin

600,000

585,000

Traceable fixed expense

120,000

160,000

Segment margin

$480,000

$425,000

 

 

 

 

 

WSR’s management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soda division by $200,000 or increase sales of the chips division by $275,000. Refer to the WSR Inc. information above. What will be the overall net effect on the company’s total profits if the advertising focuses on chips? A. Increase of $148,750B. Increase of $275,000C. Increase of $178,750D. Increase of $245,000

 

37. WSR Inc. sell a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products are as follows: 

 

     Sodas   

    Chips   

Sales

$800,000

$900,000

Variable expenses

200,000

315,000

Contribution margin

600,000

585,000

Traceable fixed expense

120,000

160,000

Segment margin

$480,000

$425,000

 

 

 

 

 

WSR’s management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soda division by $200,000 or increase sales of the chips division by $275,000. Refer to the WSR Inc. information above. Which of the following statements is true regarding which product the advertising campaign should feature? A. Overall company profits will be higher by $45,000 if the campaign features chips rather than soda.B. Overall company profits will be higher by $28,750 if the campaign features chips rather than soda.C. Overall company profits will be higher by $13,750 if the campaign features chips rather than soda.D. Overall company profits will be higher by $26,250 if the campaign features soda rather than chips.

 

38. The rate of return generated by an investment center’s assets is called: A. residual income.B. economic value added.C. return on investment.D. segment margin ratio.

 

39. Return on investment (ROI) is calculated by: A. multiplying the margin by the turnover.B. dividing the margin by the turnover.C. dividing the turnover by the margin.D. adding the margin and the turnover.

 

40. A company has computed that their “margin” is .18. Which of the following statements is the best interpretation of these results? A. $.18 of every $1 invested in assets is net profit.B. $.18 of every $1 made in sales is profit.C. Every $1 invested in assets generates $.18 in sales revenue.D. Every $1 invested in assets generates $.18 of segment margin.

 

 

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